Corporate Governance Code
The Directors of the Board believe that an engaged Board and an effective committee structure facilitate the good governance of the entire Group, and ensure an appropriate framework for its continued success and growth. In order to sustain the strong corporate culture, the Board has established an Audit Committee, a Remuneration Committee and a Nomination Committee; each with formally delegated duties and responsibilities.
The role of the Chairman is to lead the Board and be responsible for its governance, performance and effectiveness. The Chairman sets the tone for the Company and ensures that the links between the Board and the executive team, as well as between the Board and the shareholders, are strong and efficient.
In recognising the importance of high standards of corporate governance, integrity and business ethics, the Directors of the Board have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”). The QCA Code focusses on the pursuit of medium to long-term value for shareholders through the delivery of an efficient, effective and dynamic management framework, accompanied by good communication. A description of how the Group applies the 10 governance principles of the QCA Code is provided below. Further information on our compliance with the QCA Code and our corporate governance is provided in Alpha’s Annual Review 2018.
Following the AIM admission in October 2017, the Group has focussed on fulfilling its corporate governance transition from a private to a public company. This has included applying the QCA code, establishing the new committees of the Board and achieving an appropriate balance of skills and experience to deliver Alpha’s strategic vision and objectives. Two new Directors were appointed to the Board: Penny Judd (Independent Non-Executive) and John Paton (Executive); and I was delighted to be appointed as Non-Executive Chairman, following two years’ serving on the Board and the decision by Tim Trotter to step down, as was disclosed at the time of the AIM admission.
The business model and strategy of the Group are set out in full on pp 14‒16 of the Annual Review 2018. The business model and strategy, and any amendments thereto, are developed by the Chief Executive Officer and the executive team (represented in the Alpha Global Management Board); and approved by the Board. The Board oversees the execution of the Group strategy by the executive team.
The Group’s proven business model is premised upon delivering growth through the cross-sell and up-sell of its high-quality services to existing clients; and selling its services to new clients in new jurisdictions. The Group organises its service proposition around specialist practice areas, which enable it to target and meet the demands of relevant stakeholders in a range of client segments. The service offering is currently defined by 10 business practices.
The Group’s strategy is to continue to grow and achieve a larger share of its chosen markets by building on its successful service offering. The geographic expansion of Alpha’s business practices is a key component of that growth strategy. The strategy is focussed around the following main growth objectives: 1. Expanding the existing business practices; 2. Rolling out the proven practice model globally; and 3. Making selective bolt-on acquisitions.
The key risks to the Group’s business organisation are described on pp 20‒22 of the Annual Review 2018. The Group manages risk closely in order to limit any potential adverse effects on the implementation of its strategy, its performance and the interests of its shareholders. It does this by ensuring that there is a framework in place to identify and monitor risks and uncertainties, and deploying the appropriate mitigating actions (which are described alongside each risk in the Annual Review 2018).
Maintaining a good, consistent engagement with shareholders is given a high priority by the Directors of the Board. The principal methods of communication with shareholders are the Annual Review, the Annual Report & Accounts, the interim and full-year results announcements, the Annual General Meeting and the Group’s investor website.
The Global Chief Executive Officer and the Chief Financial Officer, both Directors of the Board and members of Alpha’s executive team, meet regularly with institutional investors, and analysts who publish performance information about the Group, to ensure that its corporate objectives, strategies and operational developments are clear and understood. The Non-Executive Directors are available to discuss any matters that shareholders wish to raise and discuss. The Chief Financial Officer also acts as Company Secretary and is the main point of contact for shareholders (firstname.lastname@example.org).
Due, in part, to AIM admission in October 2017, there has been considerable engagement with shareholders through investor roadshows and ad-hoc meetings in FY18. It is expected that, due to the continuing development of the business, this will extend into FY19. If, and when, voting decisions are not materially in line with the Company’s expectations, the Board will seek to engage with shareholders to understand and address any issues informing those decisions.
In line with the corporate social responsibility disclosure on pp 26‒33 of the Annual Review 2018, the Board upholds its commitment to being a socially and ethically responsible Company.
The executive team, represented in the Global Management Board, oversees the social and ethical framework, and is responsible for reviewing operational processes for managing social, environmental and ethical risk. In this respect, the Global Management Board reports into the Board of Directors, to ensure that any significant risks to the longer-term success of the business arising from such matters are adequately mitigated and addressed. The Board believes that the risk of impact to the long-term success of the Group is low, and satisfactorily managed, based upon its line of business and geographical footprint.
The Board recognises the need to maintain effective working relationships across a wide range of stakeholders. The business model identifies the different client segments with which the Group operates, which includes asset managers, asset owners, wealth managers and those who support the industry, such as third-party administrators. Other stakeholder groups include vendors, industry bodies, regulatory authorities and competitors. The Group maintains a strong dialogue with all key stakeholders; the Executive Directors of the Board, supported by the entire executive team, manage those relationships on a day-to-day basis and encourage the exchange of feedback, knowledge and perspectives about the Group. The newest offices in Singapore and Switzerland were launched in response to client requests for the Group to provide local support in those locations.
The success of the Group’s business model is founded upon its high-performing consulting team. The Board and the executive team are committed to providing an open, interactive and collaborative working environment; and there are opportunities throughout the year for employees to submit their feedback about any aspect of the working environment, the business organisation and the corporate goals. Employee feedback helps the Group to understand and focus its attentions on what matters to its employees. Feedback is also sought from the Group’s contractors at regular points during the delivery engagements on which they are working to capture any key learning points or general recommendations about the delivery framework.
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. In this respect, the objective of the Board is to set policies that seek to reduce ongoing risk as far as possible, without unduly affecting the Group’s competitiveness and flexibility. The Board believes that this approach serves the interests of creating sustainable shareholder value while also protecting the Group’s corporate culture.
The operational functions of the Group are carried out within a practical and effective risk management framework. The Global Management Board has responsibility and authority for identifying and managing risk effectively, across the business. Any decisions made by the Global Management Board in this respect are reviewed by the Board.
The identified material operational, financial and industry risks facing the Group are also reported to the Board. A summary of the principal risks and uncertainties, as well as mitigating actions, are provided on pp 20‒22 of the Annual Review 2018. The Board formally reviews and documents the principal risks to the business at least annually.
Processes to embed risk management throughout the Group continue to be reviewed and changes will be implemented as appropriate.
The Board comprises five Directors: three Non-Executive Directors and two Executive Directors. In line with QCA code guidance, two of the Non-Executive Directors, one of whom is the Chairman, are independent.
The Non-Executive Directors of the Board have been selected with the objectives of increasing the breadth of skills and experience of the Board, and bringing constructive challenge to the Executive Directors. The Non-Executive Directors are also responsible for the effective running of the Board’s committees and ensuring that the committees support the strategic priorities of the Board.
The Group has determined that the composition of the Board and its committees brings a desirable range of skills, personal qualities and experience for delivering the strategy, based upon the size and nature of the business of the Group. All Directors are subject to re-election by shareholders at the Annual General Meeting within a three-year period of their appointment. Any Directors appointed during the financial year must be formally elected at the Annual General Meeting following their appointment.
The time commitment required of all Non-Executive Directors is currently three days per month. The Executive Directors are committed on a full-time basis. The Board is satisfied that each of the Directors is able to commit sufficient time to the Group’s business and can fulfil the obligations fully. The Board and committee schedule is planned in advance of the financial year ahead in order to facilitate attendance and ensure that the appropriate discussion time is available. A record of the number of meetings of the Board during the last financial year, and the attendance by each Board member, is provided below:
|Board member||Eligible to attend||Attendance|
|Ken Fry (Chair)||5||5|
|Tim Trotter (previous Chair)||5||5|
|Maria Stricker (previous member)||4||4|
The Group believes that the successful functioning and effectiveness of the Board is premised upon a number of key factors, in addition to Board composition:
- Suitable operations (agenda, frequency of meetings, monitoring of attendance);
- Access to the appropriate advice and administrative services – via the Company Secretary and external resources as required;
- Thorough induction of new Directors to the Board and its committees;
- Performance assessment of the Board as a unit and of its members individually.
The Chairman and the Board hold these factors in the highest regard and commit to performing an annual evaluation to review and assess their application in practice.
As a provider of specialist consultancy services to the asset and wealth management industry, and an AIM-quoted company, Alpha requires a range of skills, capabilities and competencies to be represented on its Board, including experience in public markets, financial services, governance and audit, the consulting sector and business operations. The Board is satisfied that its members have the appropriate balance of backgrounds, knowledge and personal qualities in order to meet this requirement and to be able to deliver on its core objectives. Biographical details of the Directors, including a summary of their relevant experiences and how they ensure that their skillsets remain up to date, are provided in the Directors section of the website and on pp 44-45 of the Annual Review 2018.
The Nomination Committee is responsible for overseeing the selection of Board members that are equipped with the correct range of experience, knowledge, integrity and ethics. Throughout the year, the Directors have access to the advice and services of the Company Secretary. The Company Secretary also fulfils an administrative role with regards to the filings to Companies House.
In order to fulfil their duties, The Directors of the Board are entitled to take independent professional advice at the expense of the Company. The Board members may seek the advice of the Group’s legal advisers, external auditors and the Nominated Adviser (NOMAD) on matters within the Board or the committee’s terms of reference, or to provide recommendations on specific corporate or governance events, such as the AIM admission in the last financial year. In addition, there is an internal adviser to the Board (Nick Baker). The adviser to the Board is a former Board Director, who is able to provide informal assistance to the Board of Directors on its agenda of business, financial, commercial and operational matters, having both experience of the Group and the industry in which it operates.
The objectives of the Board are to review, formulate and approve the Group’s strategy, budgets and corporate activities, and to oversee the Group’s progress towards its goals. The Group has a process for evaluating the performance of the Board, of its committees and of the individual Directors, including the Chairman, in respect of these objectives.
Since the appointment of Ken Fry as Chairman, he has assessed the composition of the Board and individual contributions of each of its members to ensure that the Board is functioning in an efficient and productive manner. As a result of this assessment, a particular emphasis was placed on achieving increased public markets experience within the Board, which was realised through the appointments of Penny Judd and John Paton.
During FY19, the Board will carry out a full evaluation of its performance. The evaluation criteria include Board composition and skills, strategy and performance, governance and organisation, Board dynamics, and communication with shareholders and key stakeholders. The evaluation will be based upon the self-assessment of the Chairman and Directors. An external evaluation using an independent adviser may be executed if required. The results of the evaluation process will be analysed and reported back to the Board in order to agree any substantive issues arising and the corresponding action required.
The Board also appraises the individual members of the Board annually, the scope of which includes their skills, experience and capabilities. The appraisal takes account of additional responsibilities such as chairing or membership of the Board’s committees. The annual appraisal is carried out by the Chairman with reference to the competencies set out by the Nomination Committee pursuant to each Board role. As part of this process, any training and personal development needs are identified. The Chairman is also subject to appraisal; this process is managed by a Chairman Appraisal Group comprising the Global Chief Executive Officer and the Company Secretary.
The Nomination Committee may use the results of the evaluation process when reviewing the composition of the Board for selecting any new Board members, and in succession planning for the Directors of the Board as well as key executive team members. With the Company having listed on AIM in October 2017, the Board is only recently formed, and the Directors agree that there is no short-term requirement for succession planning. The Nomination Committee will discuss succession planning annually to ensure that a formal succession framework is in place.
The Board regards highly the importance of promoting ethical responsibility and good conduct within the Company. The Board is conscious of its role in fostering a culture of inclusion, responsibility and openness. The Group is an equal opportunities employer and encourages diversity at all levels.
These values are embedded in the Group’s leadership and throughout the organisation. They are described in further detail on pp 26‒33 of the Annual Review 2018. The culture of integrity is promoted in the Employee Handbook, which all employees must attest to, and is reinforced through the regular activities and initiatives of the corporate social responsibility team. They are overseen and sponsored by the entire executive team.
The executive team reports into the Board on any changes or risks impacting the Group’s values and behaviours. The Board is ultimately responsible for ensuring a corporate culture that is embedded globally and is consistent with the Group’s objectives, strategy and business model.
The Group operates an effective, streamlined governance framework. In this framework, the Board supports the executive team, represented by the Global Management Board, in developing and executing the Group’s strategy. Any decisions between and within these governance structures are reached through an open and constructive dialogue.
The Chairman leads the Board and is responsible for its governance structures, performance and effectiveness. This includes ensuring that the dynamics of the Board are functional and productive, and that no individual Director dominates discussion or decision making. The Chairman is also responsible for ensuring that the links between the Board and the executive team, and the Board and the shareholders, are strong and efficient. Meanwhile, the Global Chief Executive Officer is responsible for the day-to-day management of the Group’s global operations and for implementing the strategic goals agreed by the Board. The Company Secretary is the main Board point of contact for shareholders.
In order to fulfil the Group’s objectives and facilitate effective decision making, the Board has established the following committees:
- an Audit Committee to monitor the quality of the Group’s internal controls, and to ensure that the financial performance of the Group is properly measured and reported on;
- a Remuneration Committee to review the performance of the Executive Directors, the Chairman and the executive team, and make recommendations to the Board on matters relating to their remuneration and terms of service; and
- a Nomination Committee to lead the process for Board appointments.
The Board has an agenda of regular business, financial and operational matters for discussion, as well as a review of each committee’s area of work. The Board is ultimately responsible for making any key strategic or business decisions. Members of the executive team may be invited to attend meetings of the Board in order to facilitate those governance processes; in other instances, the executive team is represented by the Chief Executive Officer, who communicates all their relevant views and information. The Board has adopted terms of reference that set out which matters are specifically reserved for its decision and cannot be delegated to any committees.
The Group’s corporate governance framework will continue to be reviewed to ensure that it meets the evolving needs, size and nature of the business, and changes will be implemented as appropriate. The effectiveness of the governance structures and processes is assessed as part of the annual Board evaluation.
To support the Group’s objectives, the Board has established an Audit Committee, a Remuneration Committee and a Nomination Committee. The responsibilities of these individual committees are provided below as well as in the reports of the committees on pp 46-51 of the Annual Review 2018. From time to time, separate committees may be set up by the Board in order to consider and address specific issues, if the need arises.
The Group places a strong emphasis on the standards of good corporate governance and maintaining an effective engagement with its shareholders and key stakeholders, which it considers to be integral to longer term growth and success. The principal methods of communication with shareholders are the Annual Review, the Annual Report & Accounts, the interim and full-year results announcements, the Annual General Meeting and the website. The website is updated regularly with information regarding the Group’s activities and performance, and users can register to be alerted of new announcements, reports and events, including Annual General Meetings.
The Group’s reports and presentations can be found here.
Notices of Annual General Meetings of the Company can be found here.
The results of voting on all resolutions in Annual General Meetings are also posted to the Group’s website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20% of independent shareholders.
The Board receives regular updates on the views of the Group’s wider stakeholders from the Executive Directors; in particular, clients and employees. The Executive Directors have a close special knowledge of the interests of these stakeholders, which they receive by maintaining an open dialogue with market participants and undertaking employee feedback both on an anonymous and peer group basis.